It was just a matter of time before a New York/London mathematician got a hold of something that might actually work past the debt system breakdown.

BTW, you can bypass the internet, banks, and Wall Street and starve them of all money and fees and help out worthy creditors by loaning money directly to a person with integrity that you know and trust. You can charge them a reasonable interest rate, get income, no one ships fees to Wall Street, no one creates derivatives that blow up whole markets, and you hold the collateral. If they don’t pay you back….you get the collateral and/or you get to deduct it as a loss. And you know where they live.

This is how a relative of gg’s bought their first house in 1952 with a 15-year loan to an individual who held a lien against the house.

But you must find a person of integrity 🙂

And, for those you know without integrity….

Side musing: if you have a “friend” that you can’t stand and want to get rid of….loan them money. You may not see your money again, but you will never see them again.

Gifts: you can also just give money to people, up to $14,000 per year per person without a tax liability on either side. If you want to see your character and/or the character of another person, don’t lend them money, give them money.

groovygirl thought this interview was a good, compact form of Martin’s October 2015 Turning Point and the following impact, what he is calling the “Big Bang” or blow up/reset of global debt.

Quote:

Will the Fed finally raise interest rates? Armstrong contends, “The Fed will have no real choice. . . . The Fed will come under significant pressure to raise interest rates because the newspapers and Congress will blame them and say they are creating a bubble with low interest rates. The more they raise interest rates, the higher the stock market will go. I know that sounds crazy . . . historically, interest rates bottom with the markets. I mean, you lose confidence and people won’t borrow.”

side musing: still the big debate about inflationary or deflationary. Groovygirl still contends that the US will have both, so prepare/hedge for both. GG also believes that parts of the globe will have inflation and other parts will have deflation. Groovygirl thinks this is one of the main reasons that this global debt reset will be so confusing and shocking.

As you know, gg has been into real estate investing lately. A perfect example of inflation and deflation happening at the same time within one market. US high-end real estate asset prices have been increasing and low-end real estate have been collapsing in price. And the mid-range depends on where you are in the US. Whatever market(s) you are investing in, educate yourself and understand all aspects of that market.

Banks are claiming that it is because of the Frank-Dodd rules, which really are so thin now, that this argument just doesn’t hold water. In addition, what little worry banks had about actually being responsible for their depositors money just got voted out by the new spending bill tonight (December 11, 2014). So, gg thinks that the big banks are getting prepared. They are lowering the cash they may need to return to customers during a crisis and anything beyond their capacity to produce, they are putting on the government’s shoulders. Or someone to blame for lack of cash for depositors.

Although the stock market is going well. That’s about it. Oil is down putting major pressure on the US oil industry which is the only thing going well in the last 4 years. gg sees a major debt squeeze here if oil stays under $70 for the next 12 months. Debt has to be paid whether the oil well is running or not. Shutting down wells doesn’t pay off the bank, it just cuts payroll and hurts local economies.

Derivatives….the thing the big banks want the government to cover if (when) they blow up.

Derivatives, take your pick. Auto loans (maxed out), commodities (oil), stocks, government debt, Europe (still not fixed), China (slowing), emerging markets, and of course, currencies (very out of balance the last 8 months). Currencies are the largest derivative market. One or more can blow up at anytime and trigger a chain event. (Could be blowing up as we speak, but the chain reaction to multiple markets causes the crisis.) And the banks know that.

The good news is that since the government will cover any derivative losses for the banks, you will not lose money on deposit. May have to wait to withdraw it. (Money you can on get to, is not your money). Probably lose broker/invested money, it’s not covered. Groovygirl has suggested from the beginning to have investment funds with 2-3 different brokerage houses and then cash with 2-3 banks. That’s personal and business accounts. It’s extra accounting, but may reduce risk and at least have one account you can access immediately to keep things going in a crisis event.

Bad news is that the government will “print” to cover and you will be ultimately responsible for it through taxes, currency value, or perhaps even a brand new currency to restructure all the US debt.

This will not end well.

Make sure you are as protected as much as you can be. You can not control derivatives or government votes or market crisis, but you can control your money and finances.

I suggest to you that the next crisis will not be called a financial crisis. It will initially be labeled something else to keep people from assuming it is an event like 2007-2009 as long as possible. As this will cause everyone and anyone to “panic”. The time to prepare is yesterday, not tomorrow.

That strategy depends on the rest of the world remaining strong. But if we see a turn down 2016-2020, it is hard to imagine Europe surviving the coming political storm.

groovygirl thought this was very important. This seems the only option to “control” the European debt implosion as everyone else is in a debt collapse, too. It’ s hard for a group of drowning men to save each other. May be impossible, but it gives us an idea of what the “first world”, US allies will try to do. Of course, there is that nasty unknown of shadow dark pool trading…..

Starting with the week of May 26, 2014, the Financial Industry Regulatory Authority (FINRA) began releasing weekly dark pool trading data to the public. That sliver of sunlight shows that some of the corporations with the largest share buyback programs are also among the heaviest traded stocks within the dark pools.

With banking declining, banks must make money anyway that can. This “recession” is hard on everyone, only bankers don’t go to jail for illegal activity to support their families, in gg’s humble and completely uneducated opinion 🙂

Take the case of Apple Computer. According to FINRA data, in the five weekly periods of May 26 through June 23, dark pools traded over 103.6 million shares of Apple stock. The heaviest week was the week of June 9, 2014 when 39.9 million shares traded in dark pools. Goldman Sachs was responsible for trading 2,444,350 shares of Apple that week in its dark pool, Sigma-X, and has been in the top tier of dark pools trading Apple stock in all subsequent weeks reported by FINRA.

So what happens when corporations need cash to meet operation costs? Will they all put their stock up for sale at the same time? And who is going to buy that stock? Goldman and sell to muppets? I think the muppets are either out of cash or pissed off or both.

April 28, 2014

As totallygroovygirlfriday has mentioned before, she is not going to hold all her gold/silver forever. The next investment class that groovygirl will pursue is real estate, specifically residential home rentals and leases and then later, if luck is on her side, commercial real estate. This is just what gg is doing; there are lots of other investments out there. You are responsible for your own financial decisions.

Just to be clear, totallygroovygirl is NOT selling precious metals right now. GG is just dipping her toe into a new investment class to see what happens and learn.

Although the main investment move will be later, when gold/silver are closer to their highs in the long-term cycle (sometime between 2015-2020). But in preparation to that move, groovygirl has been researching and studying different types of real estate investing since 2003. Reading and researching are fine, but actual experience in an investment is a quick and excellent teacher.

GG always does a lot of research before she moves to action. She studied gold, silver and dollar cycles for four years, before she bought her first gold investment. And even after that, she moved slowly into the position she is in now.

Groovygirl has a long-term, life-time investing plan and is very patient. You may not be this way. That’s Ok. This transition from precious metals to real estate over the next 10 years is part of that life time plan.

Financial education and preparation equals financial freedom, which in turn, create nights full of restful sleep, and not worried-induced insomnia.

Now, as we know from Martin Armstrong’s Real Estate Cycle, the US housing market is in a long-term cycle and we are now on the downside of that 2007 peak, with the ongoing banking crisis/mortgage derivative crisis being the main driver of this long-term decline through 2032. There are ways of making money in any market condition, the important thing is to know which way the market is going.

Groovygirl has decided to make her first real estate investment now and not later for several different reasons. But she is only making one real estate investment right now.

Groovygirl’s real estate investment forecast chart is based on cash flow, not capital gains. In fact gg is expecting a tax loss, and will (hopefully) time that loss to offset other income. This is part of the exit strategy. Always know when you are getting out of an investment BEFORE you get in. If Martin is completely wrong and housing goes up, gg will have a gain, which will be nice. And if it moves sideways, gg will break even, and get the depreciation write off in the mean time. And if the government should change real estate tax laws in the meantime, she has some flexibility there too.

Groovygirl is making this move now for several reasons:

To find out if her cashflow projections really work. Any investment can look great on paper.

Find out if she really likes this type of investing. She thinks she is passionate about it, as much as she likes precious metals, but is that really the case? You really have to be passionate about the investments you are in. Making money only goes so far, when you are knee deep in details and drama. (That is the main reason gg doesn’t have a large position in stocks. She just isn’t that excited about them. That can always change.)

There are a lot of foreclosures and REOs out there right now, and therefore, cheap houses are on the market. The current pricing fits in with gg’s cash flow projections and creates a good ROI. After 2015, gg is sure it will be much better, that is why she is only purchasing one investment right now.

Real estate investing has great tax advantages, which would benefit gg’s circumstances now and later.

If it fails miserably, she will probably be able to get out before 2015 (the next downturn according to Martin Armstrong) with no or very little capital loss.

Groovygirl will expand on this move in future posts, but the main focus of the muses of the moment blog will still be precious metals and the financial crisis. She will share her experiences in this investment class and her overall plan after gold/silver. This is what groovygirl is doing with her money. You are responsible with what you do with your money.

Very important points:

She is not selling any gold or silver.

The real estate investment has NO debt attached to it. If it did, she would lose the options to get out of the investment with the capital input intact.

side musing: if we are facing the long-term collapse in real estate as Martin says, cash is king. Having 80-90% debt on a real estate investment will quickly turn into a capital loss on paper and will require more cash input to get out of. Example: let’s say you have an 80% mortgage loan on a rental creating monthly cash flow of $200. That is not a lot of breathing room. What if your house loses 30% in value, property taxes skyrocket, there is a new tax or fee for landlords in your area, or heaven forbid, the government takes away all the tax savings you get with real estate. These are scenarios where your cash flow would be impacted and your ability to sell the asset without putting in more cash to cover the mortgage obligation. You could very easily be stuck with an asset that creates negative cash flow and that’s not an asset. groovygirl would suggest no more than a 50% mortgage on a real estate investment in this environment, ideally no debt.

Groovygirl has been searching for the loophole. The loophole that will keep the real estate market going (in the face of the complete fall off of mortgage apps in the last six months along with higher rates) through 2015, Martin Armstrong’s date; and the loophole that will trigger the next, and according to Martin, extended decline in the US real estate market thru 2032.

Click here for Martin’s paper and chart on the US real estate 78-yr cycle.

gg thinks she found the loophole.

Here is an article that groovygirl disagrees with, but it has some interesting information about the new Qualified Lending rules. From the linked article:

With the dislocations in mortgage lending since the housing bubble popped, Fannie Mae and Freddie Mac have increased their share of the mortgage market significantly. When combined with lending from the Federal Housing Administration and the Veteran’s Administration, the government or government-sponsored share of mortgage lending has climbed to more than 90 percent in recent years. That is an untenable situation in the long run, but is unlikely to change much this year.

The good news is that new Qualified Mortgage lending rules from the Consumer Financial Protection Bureau exempt home mortgages that qualify for purchase or securitization from Fannie and Freddie. As a result, mortgage lenders won’t have to tighten their mortgage-underwriting requirements in response to QM as long as they sell their loans to the GSEs.

Side musing: groovygirl is feeling the same way she felt in 2005 and 2006: who in the world is left to get a mortgage? Haven’t we maxed out all plausable applicants? , no, some deceased people were left to carry on the housing market boom until 2007. Groovygirl just did not think dead people could get a loan and did not factor that in. Again, gg is thinking, with unemployment at a real rate of 23%, who else can possibly qualify for a mortgage, especially with all these new rules? Aren’t we maxed out. Apparently, it’s the GSEs to the rescue to help this thing along for another year or so.

Click here, looks like even the corporate buyers are slowing. But, they are saving their capital for the big transfer from Freddie and Fannie? Read on.

And here is the loophole for the next trigger….

Replacing Fannie and Freddie with private insurance (but with government bailout, if necessary). Be careful, groovygirl actually threw up when she read this. Click here. A quote from the link at Forbes:

Our political leadership is proposing that we abolish Fannie and Freddie for the sins of the banks and the mortgage lenders, and then hand over the keys to these same architects of the mortgage disaster that brought us to the brink of financial collapse. We are still healing and these are serious people proposing that we again legislate our way to mortgage prosperity, using no more common sense than that which got us into this mess. What could go wrong?

gg says: yes, what could go wrong? It looks like on the surface that getting rid of GSEs and “selling” them to private underwriting companies is a good thing. It will get the government off the hook for future collapses, right? Wrong!

But, the real reason for this extremely unwise decision. The transfer of wealth.

Here is a little tidbit from Catherine Austin-Fitts. She clearly knows the possibilities. It is a repeat of the same game as 1980’s.

Click here.gg says: But this time is totally different, we are in a global debt deflation, global currency crisis (Japanese currency trades can’t get us out of this one), and an aging population and debt-ridden younger population.

From Catherine’s link above. You pay for the detail. Bold is gg’s.

The current proposal to phase out Fannie Mae and Freddie Mac has the potential for ever greater back door shenanigans. Lot’s of money that can go out through the back door when the federal government turns huge amounts of federal credit over to private insurance companies. For example, when FHA engaged in coinsurance with private mortgage insurance providers in the 1980’s, the FHA General Fund lost 50% of the $9 billion underwritten in 3 1/2 years. They were paid a mortgage insurance premium of .50%

Given AIG’s traditional role in these and related areas, and Berkshire Hathaway’s relatively new activities in municipal bonds and local realtors, is this part of the work up to the ultimate in reengineering the federal budget and housing finance system by place? I want to see the players behind the scenes.

gg says: looks like we are right on schedule for the next mortgage/insurance/housing/banking/hedge fund crisis. The good news: fire sale housing prices for those with cash!

March 14, 2014

New interview with Catherine Austin Fitts with Sound Money via zerohedge. Click here. Good one!! Worth a listen. About 24 min. Catherine has a very good understanding about how governments work and how they centralize economics and money and that impact on you and me.